Luxembourg, July 27, 2017 - ArcelorMittal (referred to as
"ArcelorMittal" or the "Company") (MT (New York, Amsterdam, Paris,
Luxembourg), MTS (Madrid)), the world's leading integrated steel
and mining company, today announced results[1] for the three month
and six month periods ended June 30, 2017.
Highlights: Health and safety: LTIF rate of 0.72x in 2Q
2017; 1H 2017 LTIF of 0.78x stable YoY Operating income of $1.4
billion in 2Q 2017; 1H 2017 operating income of $3.0 billion, 38.1%
higher YoY EBITDA of $2.1 billion in 2Q 2017; 1H 2017 EBITDA of
$4.3 billion, 61% higher YoY Net income of $1.3 billion in 2Q 2017;
1H 2017 net income of $2.3 billion as compared to $696 million in
1H 2016 Steel shipments of 21.5 Mt in 2Q 2017, up 2% vs. 1Q 2017;
1H 2017 steel shipments of 42.5Mt, down 2.4% YoY. Steel shipments
down 1.2% on a comparable basis 2Q 2017 iron ore shipments of
15.2Mt (-0.9% YoY), of which 9.5 Mt shipped at market prices (-1.2%
YoY); 1H 2017 market price iron ore shipments at 18.1Mt; up 4.3%
YoY Net debt decreased to $11.9 billion as of June 30, 2017, as
compared to $12.1 billion as of March 31, 2017 due to positive free
cash flow[2] (+$0.6 billion) (despite investment in working
capital) offset in part by foreign exchange losses (-$0.4
billion) |
Key strategic developments: Advancing our
leadership position: ArcelorMittal launched two new advanced high
strength steel products Usibor® 2000 and Ductibor® 1000 to the
market, furthering our industry leading offering to automotive
customers; in addition, the new Jet Vapor Deposition line at Liege
highlights ArcelorMittal's technology leadership Action 2020
progress ongoing: Transformation program in Europe progressing
well; we are now operating from a more efficient, resized footprint
and utilising enhanced digitalization of operations to drive
productivity improvements and support maintenance excellence
Investing with focus and discipline: ArcelorMittal selected to
become the new owner of Ilva, a significant opportunity to create
value for our shareholders by leveraging ArcelorMittal's strengths
to realise Ilva's potential as a Tier 1 supplier to European and
Italian steel customers. Additionally, ArcelorMittal Brasil S.A.
announced the acquisition of Votorantim S.A. long steel businesses
in Brazil[3] to strengthen the Company's long product capability
and product leadership Strategic investments completed in line with
the continuous shift towards higher added value products: Completed
slab yard expansion project at Calvert (US), and Galvaline
investment at Dofasco (Canada), increasing our galvanised sheet
capability; and commissioned the ArcelorMittal Krakow (Poland) hot
rolling mill extension for increased HRC and HDG capacity Balance
sheet progress: Net debt was lower by $0.8 billion YoY despite a
$2.8 billion investment in working capital over the last 12 months
reflecting improved market conditions; S&P and Moody's credit
rating upgrades reflecting ongoing progress towards achieving our
financial priority of an investment grade credit rating |
Outlook: Looking to the outlook, current market conditions
are improved compared to twelve months ago with steel spreads
currently at healthy levels. The demand environment is positive, as
evidenced by the highest readings from the ArcelorMittal weighted
PMI Index since April 2011, which suggests that steel shipments in
2H 2017 will be higher than would normally be suggested by
seasonality alone. The Company now expects that the cash needs of
the business (excluding working capital and premiums paid to retire
debt early of $0.2 billion (not included in previous guidance)) in
2017 to be approximately $4.6 billion (as compared to $5.0 billion
previous guidance). Given the liability management exercise and
lower average debt, we now expect interest expense to decline to
$0.8 billion in 2017 (as compared to $0.9 billion from previous
guidance and $1.1 billion in FY 2016). While capex expectation for
2017 remains at $2.9 billion (from $2.4 billion in 2016), the
Company expects lower cash taxes and contributions to fund pensions
and other cash expenses to be lower than previous guidance. Given
the improved market conditions, the Company now expects a full year
2017 investment in working capital of approximately $1.5 billion
(as compared to previous guidance of approximately $1.0
billion). |
Financial highlights (on the basis of IFRS1):
(USDm)
unless otherwise shown |
2Q
17 |
1Q
17 |
2Q
16 |
1H
17 |
1H
16 |
Sales |
17,244 |
16,086 |
14,743 |
33,330 |
28,142 |
Operating
income |
1,390 |
1,576 |
1,873 |
2,966 |
2,148 |
Net
income attributable to equity holders of the parent |
1,322 |
1,002 |
1,112 |
2,324 |
696 |
Basic
earnings per share (US$)[4] |
1.30 |
0.98 |
1.13 |
2.28 |
0.88 |
|
|
|
|
|
|
Operating
income/ tonne (US$/t) |
65 |
75 |
85 |
70 |
49 |
EBITDA |
2,112 |
2,231 |
1,770 |
4,343 |
2,697 |
EBITDA/
tonne (US$/t) |
98 |
106 |
80 |
102 |
62 |
Steel-only EBITDA/ tonne (US$/t) |
83 |
83 |
73 |
83 |
56 |
|
|
|
|
|
|
Crude
steel production (Mt) |
23.2 |
23.6 |
23.1 |
46.8 |
46.3 |
Steel
shipments (Mt) |
21.5 |
21.1 |
22.1 |
42.5 |
43.6 |
Own iron
ore production (Mt) |
14.7 |
14.0 |
13.5 |
28.7 |
27.6 |
Iron ore
shipped at market price (Mt) |
9.5 |
8.7 |
9.6 |
18.1 |
17.4 |
Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman
and CEO, said: "We have materially improved our financial
performance in the first half of 2017, and continue to make
important progress on our Action 2020 plan. The recently announced
acquisition of Ilva represents a unique opportunity to
create value for our shareholders. Looking ahead demand
remains strong in our core markets supporting robust order books
and healthy levels of steel spreads. However, it remains a
matter of concern that we are not able to capture the full benefits
of this demand growth due to continued high levels of imports. We
continue to work towards achieving a comprehensive trade solution
in response to unfair imports." Second quarter 2017 earnings
analyst conference call ArcelorMittal management (including
CEO and CFO) will host a conference call for members of the
investment community to discuss the second quarter period ended
June 30, 2017 on:
Date |
US Eastern time |
London |
CET |
Thursday
July 27, 2017 |
9.30am |
2.30pm |
3.30pm |
|
|
|
|
The dial in numbers are: |
|
|
Location |
Toll free
dial in numbers |
Local
dial in numbers |
Participant |
UK
local: |
0800 0515
931 |
+44
(0)203 364 5807 |
24379437# |
US
local: |
1 86 6719
2729 |
+1 24
0645 0345 |
24379437# |
US (New
York): |
1 86 6719
2729 |
+ 1 64
6663 7901 |
24379437# |
France: |
0800
914780 |
+33 1
7071 2916 |
24379437# |
Germany: |
0800 965
6288 |
+49 692
7134 0801 |
24379437# |
Spain: |
90 099
4930 |
+34 911
143436 |
24379437# |
Luxembourg: |
800
26908 |
+352 27
86 05 07 |
24379437# |
|
|
|
|
A replay of
the conference call will be available for one week by dialing: |
Number |
Language |
Access code |
+49
(0) 1805 2047 088 |
English |
511066# |
Forward-Looking Statements This document may contain
forward-looking information and statements about ArcelorMittal and
its subsidiaries. These statements include financial projections
and estimates and their underlying assumptions, statements
regarding plans, objectives and expectations with respect to future
operations, products and services, and statements regarding future
performance. Forward-looking statements may be identified by the
words "believe", "expect", "anticipate", "target" or similar
expressions. Although ArcelorMittal's management believes that the
expectations reflected in such forward-looking statements are
reasonable, investors and holders of ArcelorMittal's securities are
cautioned that forward-looking information and statements are
subject to numerous risks and uncertainties, many of which are
difficult to predict and generally beyond the control of
ArcelorMittal, that could cause actual results and developments to
differ materially and adversely from those expressed in, or implied
or projected by, the forward-looking information and statements.
These risks and uncertainties include those discussed or identified
in the filings with the Luxembourg Stock Market Authority for the
Financial Markets (Commission de Surveillance du Secteur Financier)
and the United States Securities and Exchange Commission (the
"SEC") made or to be made by ArcelorMittal, including
ArcelorMittal's latest Annual Report on Form 20-F on file with the
SEC. ArcelorMittal undertakes no obligation to publicly update its
forward-looking statements, whether as a result of new information,
future events, or otherwise. About
ArcelorMittal ArcelorMittal is the world's leading steel and
mining company, with a presence in 60 countries and an industrial
footprint in 18 countries. Guided by a philosophy to produce safe,
sustainable steel, we are the leading supplier of quality steel in
the major global steel markets including automotive, construction,
household appliances and packaging, with world-class research and
development and outstanding distribution networks. Through
our core values of sustainability, quality and leadership, we
operate responsibly with respect to the health, safety and
wellbeing of our employees, contractors and the communities in
which we operate. For us, steel is the fabric of life, as it
is at the heart of the modern world from railways to cars and
washing machines. We are actively researching and producing
steel-based technologies and solutions that make many of the
products and components people use in their everyday lives more
energy efficient. We are one of the world's five largest
producers of iron ore and metallurgical coal. With a geographically
diversified portfolio of iron ore and coal assets, we are
strategically positioned to serve our network of steel plants and
the external global market. While our steel operations are
important customers, our supply to the external market is
increasing as we grow. In 2016, ArcelorMittal had revenues of
$56.8 billion and crude steel production of 90.8 million metric
tonnes, while own iron ore production reached 55.2 million metric
tonnes. ArcelorMittal is listed on the stock exchanges of New
York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the
Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia
(MTS). For more information about ArcelorMittal please visit:
http://corporate.arcelormittal.com/ Enquiries
ArcelorMittal Investor Relations |
|
|
|
Europe |
|
|
|
Tel: +44
207 543 1128 |
Americas |
|
|
|
Tel: +1
312 899 3985 |
Retail |
|
|
|
Tel: +44
207 543 1156 |
SRI |
|
|
|
Tel: +44
207 543 1156 |
Bonds/Credit |
|
|
|
Tel: +33
1 71 92 10 26 |
|
|
|
|
|
ArcelorMittal Corporate Communications |
|
|
E-mail: press@arcelormittal.com Tel: +44 0207 629
7988 |
Paul Weigh |
|
|
Tel: +44
203 214 2419 |
France |
Image
7 |
|
|
Tel: +33
153 70 94 17 |
Corporate responsibility and safety
performance Health and safety - Own personnel and contractors
lost time injury frequency rate Health and safety performance,
based on own personnel figures and contractors lost time injury
frequency (LTIF) rate was 0.72x in the second quarter of 2017 ("2Q
2017") as compared to 0.80x for the first quarter of 2017 ("1Q
2017") and 0.79x for the second quarter of 2016 ("2Q 2016").
Health and safety performance was stable at 0.78x in the
first six months of 2017 ("1H 2017") as compared to the first six
months of 2016 ("1H 2016"). The Company's effort to improve
the Health and Safety record continues and remains focused on both
further reducing the rate of severe injuries and preventing
fatalities. Own personnel and contractors - Frequency
rate
Lost time injury frequency rate |
2Q 17 |
1Q 17 |
2Q 16 |
1H 17 |
1H 16 |
Mining |
0.58 |
0.58 |
0.84 |
0.58 |
0.83 |
NAFTA |
0.51 |
0.85 |
0.62 |
0.75 |
0.84 |
Brazil |
0.37 |
0.41 |
0.46 |
0.40 |
0.42 |
Europe |
1.08 |
1.20 |
1.11 |
1.15 |
0.97 |
ACIS |
0.62 |
0.45 |
0.53 |
0.52 |
0.61 |
Total
Steel |
0.75 |
0.83 |
0.78 |
0.81 |
0.77 |
Total
(Steel and Mining) |
0.72 |
0.80 |
0.79 |
0.78 |
0.78 |
Key corporate responsibility highlights for 2Q 2017:
- Annual Review, Sustainable Progress, published in May 2017 as
the group's second step towards integrated reporting.
- Launched 2nd generation of our iCARe® electrical steels in June
2017. iCARe® offers more power and driving range for electric
motors.
- On top of the relining of blast furnace no. 5 and modernization
of the basic oxygen furnace already completed in Krakow, Poland,
the capacity expansion of the hot rolling mill and a new
galvanizing line have been commissioned in 2Q 2017. Together, these
investments exceed €120 million and not only will they extend the
life of the blast furnace for the next 20 years, preserving jobs in
the Krakow unit and numerous related industries, but they will also
ensure the Krakow site complies with EU air emission regulations
which come into force in autumn 2018.
- On June 27, 2017, ArcelorMittal filed its 2016 report on
Payments to Governments in respect of Extractive Activities, which
provides a consolidated overview of payments made by the Company
and its subsidiaries in 2016 to governments regarding its mining
operations. The report, which complies with new reporting
requirements under Luxembourg law, is available for download from
corporate.arcelormittal.com within the 'Investors' section.
Analysis of results for the six months ended June 30, 2017
versus results for the six months ended June 30, 2016 Total
steel shipments for 1H 2017 were 42.5 million metric tonnes. On a
comparable basis, excluding shipments from assets sold subsequent
to the comparable period (i.e. sale of long steel producing
subsidiaries in the US (LaPlace and Vinton) and Zaragoza in Spain),
and excluding the impact of the optimization at Zumarraga in Spain
(Europe segment) total steel shipments in 1H 2017 declined 1.2% as
compared to 1H 2016. Sales for 1H 2017 increased by 18.4% to
$33.3 billion as compared with $28.1 billion for 1H 2016, primarily
due to higher average steel selling prices (+23.1%), and higher
seaborne iron ore reference prices (+43%). Depreciation of
$1.3 billion for 1H 2017 was stable as compared to 1H 2016. FY 2017
depreciation is expected to be approximately $2.8
billion. Impairment charges for 1H 2017 were $46 million
related to a downward revision of cash flow projections in
South Africa as compared to impairment charges for 1H 2016 of $49
million related to the sale of ArcelorMittal Zaragoza in
Spain. Exceptional income for 1H 2016 was $832 million
relating to a one-time gain on employee benefits following the
signing of the US labour contract[5]. Operating income for 1H
2017 was $3.0 billion as compared to $2.1 billion in 1H 2016.
Operating results for 1H 2016 were positively impacted by
exceptional income as discussed above. Income from investments
in associates, joint ventures and other investments in 1H 2017 was
$206 million as compared to $492 million in 1H 2016. Income from
investments in associates, joint ventures and other investments in
1H 2017 included improved performance of Calvert and Chinese
investees, offset in part by a loss on dilution of the Company's
stake in China Oriental[6]. Income from investments in associates,
joint ventures and other investments for 1H 2016 included $329
million related to gain on disposal of Gestamp[7]. Income from
investments in associates, joint ventures and other investments in
1H 2016 and 1H 2017 includes the annual dividend received from
Erdemir of $44 million, and $45 million, respectively. Net
interest expense (including interest expense and interest income)
was lower at $430 million in 1H 2017, as compared to $638 million
in 1H 2016, driven by debt reduction including early bond
repayments and repayment at maturity on bonds. The Company now
expects full year 2017 net interest expense of approximately $0.8
billion (reduced from previous guidance of $0.9
billion). Foreign exchange and other net financing gains were
$77 million for 1H 2017 as compared to foreign exchange and other
net financing costs of $441 million for 1H 2016. Foreign exchange
and other net financing gains for 1H 2017 include foreign exchange
gains of $282 million as compared to a foreign exchange gain of $60
million in 1H 2016, mainly on account of USD depreciation of 8.3%
against the Euro (versus 2% depreciation in prior period). 1H 2017
includes non-cash mark-to-market gains on derivatives (primarily
mandatory convertible bonds call options following the market price
increase in the underlying shares) totalling $0.3 billion in 1H
2017 as compared to $0.1 billion in 1H 2016. The foreign exchange
gain in 1H 2017 is largely non-cash and primarily relates to the
gain from the impact of the USD movements on Euro denominated
deferred tax assets, partially offset by foreign exchange losses on
euro denominated debt. Foreign exchange and other net financing
gains/costs for 1H 2017 and 1H 2016 also includes $159 million and
$237 million premium expense on the early redemption of bonds.
ArcelorMittal recorded an income tax expense of $480 million
for 1H 2017 as compared to an income tax expense of $853 million
for 1H 2016. The tax expense in 1H 2016 includes derecognition
of deferred tax assets (DTA) amounting to $0.7 billion in
Luxembourg. This derecognition is related to revised expectations
of DTA recoverability in US dollar terms, and is not related to a
deterioration of expected future taxable income.ArcelorMittal's net
income for 1H 2017 was $2.3 billion, or $2.28 earnings per share4,
as compared to net income in 1H 2016 of $0.7 billion, or $0.88
earnings per share4. Analysis of results for 2Q 2017 versus 1Q
2017 and 2Q 2016 Total steel shipments in 2Q 2017 were 2%
higher at 21.5 million metric tonnes as compared with 21.1 million
metric tonnes for 1Q 2017 primarily due to improved shipments in
Brazil (+17.8%), Europe (+2.5%), ACIS (+1.1%), offset in part by
lower shipments in NAFTA (-3.4%). On a comparable basis,
excluding shipments from assets sold subsequent to the comparable
period (i.e. considering the sale of Zaragoza in Spain), and
excluding the impact of the optimization at Zumarraga in Spain
(Europe segment) total steel shipments for 2Q 2017 were 2.0% lower
as compared to 2Q 2016, primarily due to lower shipment volumes in
Brazil (-2.5% due to weak construction market), Europe (down 0.2Mt
or -2.2% due to weaker long products) and ACIS (down 0.2Mt or -5.7%
due to weak South Africa market and lower shipments in Ukraine).
Sales in 2Q 2017 were $17.2 billion as compared to $16.1
billion for 1Q 2017 and $14.7 billion for 2Q 2016. Sales in 2Q 2017
were 7.2% higher as compared to 1Q 2017 primarily due to higher
average steel selling prices (+4.8%), higher steel shipments (+2%),
higher market-priced iron ore shipments (+9.5%) offset in part by
lower seaborne iron ore reference prices (-26.6%). Sales in 2Q 2017
were 17% higher as compared to 2Q 2016 primarily due to higher
average steel selling prices (+21.5%) and higher seaborne iron ore
reference prices (+13.0%) offset by lower steel shipments (-2.8%)
and lower market-priced iron ore shipments
(-1.2%). Depreciation for 2Q 2017 was higher at $676 million
as compared to $655 million for 1Q 2017 and stable as compared to
$680 million in 2Q 2016. Depreciation increased in 2Q 2017 as
compared to 1Q 2017, primarily on account of foreign exchange
differences following the depreciation of USD vs major currencies.
Impairment charges for 2Q 2017 were $46 million related to a
downward revision of cash flow projections in South Africa.
Impairment charges for 2Q 2016 were $49 million related to the sale
of the ArcelorMittal Zaragoza facility in Spain. Exceptional
income for 2Q 2016 was $832 million relating to a one-time gain on
employee benefits following the signing of the US labour
contract5. Operating income for 2Q 2017 was $1.4 billion as
compared to $1.6 billion in 1Q 2017 and $1.9 billion in 2Q 2016.
Operating results for 2Q 2017 were impacted by impairment charges
as discussed above. Operating results for 2Q 2016 were impacted by
exceptional income discussed above. Income from associates,
joint ventures and other investments for 2Q 2017 of $120 million
was higher as compared to income for 1Q 2017 of $86 million and
lower as compared to $168 million for 2Q 2016. Income from
associates, joint ventures and other investments for 2Q 2017
increased on account of improved performance of the Chinese
investees. Income in 1Q 2017 included the annual dividend declared
by Erdemir ($45 million) offset by a loss on dilution of the
Company's stake in China Oriental6. Income from associates, joint
ventures and other investments for 2Q 2016 included an annual
dividend received from Erdemir ($44 million) which in 2017 is
included in 1Q 2017. Net interest expense in 2Q 2017 was $207
million as compared to $223 million in 1Q 2017 and $306 million in
2Q 2016. Net interest expense was lower in 2Q 2017 as compared to
1Q 2017 and 2Q 2016 primarily due to debt reduction including early
bond repayment via debt tenders and repayment at maturity on bonds
during 2016 and 2017. Foreign exchange and other net
financing gains in 2Q 2017 were $210 million as compared to foreign
exchange and other net financing costs of $133 million for 1Q 2017
and costs of $450 million in 2Q 2016. The foreign exchange
gains/losses are largely non-cash and primarily relate to the
gains/losses from the impact of the USD movements on
euro-denominated deferred tax assets, partially offset by foreign
exchange gain/losses on euro-denominated debt. For 2Q 2017 a
foreign exchange gain of $247 million was recorded (as compared to
a gain of $35 million for 1Q 2017) mainly on account of a 6.7%
depreciation of the USD against the Euro (versus 1.4% depreciation
in 1Q 2017). Both 2Q 2017 and 1Q 2017 include non-cash
mark-to-market gains on derivatives (primarily mandatory
convertible bonds call options following the market price increase
in the underlying shares) of $150 million and $158 million,
respectively. 1Q 2017 includes $159 million on premium expenses on
an early repayment of bonds (settled in April 2017). Foreign
exchange and other net financing costs for 2Q 2016 include a
foreign exchange loss of $47 million mainly on account of USD
appreciation of 2.5% against the Euro and 10.9% depreciation
against BRL. 2Q 2016 also includes $237 million premium expense on
the early redemption of bonds. ArcelorMittal recorded an
income tax expense of $197 million for 2Q 2017 as compared to an
income tax expense of $283 million for 1Q 2017 and an income tax
expense of $153 million for 2Q 2016. ArcelorMittal recorded
net income for 2Q 2017 of $1,322 million, or $1.30 earnings per
share4, as compared to net income for 1Q 2017 of $1,002 million, or
$0.98 earnings per share4, and a net income for 2Q 2016 of $1,112
million, or $1.13 earnings per share4. Capital expenditure
projects The following tables summarize the Company's
principal growth and optimization projects involving significant
capital expenditures. Completed projects in most recent
quarters
Segment |
Site |
Project |
Capacity / particulars |
Actual completion |
NAFTA |
Indiana Harbor |
Indiana Harbor "footprint optimization project" |
New caster at No.3 Steelshop installed |
4Q
2016(a) |
NAFTA |
AM/NS Calvert |
Phase 2: Slab yard expansion (Bay 5) |
Increase coil production level from 4.6Mt/year to 5.3Mt/year
coils |
2Q
2017 |
NAFTA |
ArcelorMittal Dofasco (Canada) |
Phase 2: Convert the current galvanizing line #4 to a Galvalume
line |
Allow the galvaline #4 to produce 160kt galvalume and 128kt
galvanize and closure of galvanize line #1 (capacity 170kt of
galvalume) |
2Q
2017 |
Europe |
ArcelorMittal Krakow (Poland) |
Hot strip mill (HSM) extension |
Increase hot rolled coil (HRC) capacity by 0.9Mt/year |
Commissioned 2Q 2017(b) |
Europe |
ArcelorMittal Krakow (Poland) |
Hot dipped galvanizing (HDG) increase |
Increasing HDG capacity by 0.4Mt/year |
Commissioned 2Q 2017(b) |
Ongoing projects
Segment |
Site |
Project |
Capacity / particulars |
Forecast completion |
Europe |
Gent & Liège (Europe Flat Automotive UHSS Program) |
Gent: Upgrade HSM and new furnaceLiège: Annealing line
transformation |
Increase ~400kt in Ultra High Strength Steel capabilities |
2017 |
Europe |
ArcelorMittal Differdange |
Modernisation of finishing of "Grey rolling mill" |
Revamp finishing to achieve full capacity of Grey mill at
850kt/y. |
1Q
2018 |
NAFTA |
Indiana Harbor |
Indiana Harbor "footprint optimization project" |
Restoration of 80" HSM and upgrades at Indiana Harbor finishing and
logistics |
2018(a) |
ACIS |
ArcelorMittal Kryvyi Rih |
New LF&CC 2&3 |
Facilities upgrade to switch from ingot to continuous caster route.
Additional billets of 290kt over ingot route through yield
increase. |
4Q
2018 |
NAFTA |
Burns Harbor |
New Walking Beam Furnaces |
Two new walking beam reheat furnaces bringing benefits on
productivity, quality and operational cost |
2021 |
Brazil |
ArcelorMittal Vega Do Sul |
Expansion project |
Increase hot dipped galvanizing (HDG) capacity by 0.6Mt/year and
cold rolling (CR) capacity by 0.7Mt/year |
On
hold |
Brazil |
Juiz de Fora |
Meltshop expansion |
Increase in meltshop capacity by 0.2Mt/year |
On
hold(c) |
Brazil |
Monlevade |
Sinter plant, blast furnace and meltshop |
Increase in liquid steel capacity by 1.2Mt/year;Sinter feed
capacity of 2.3Mt/year |
On
hold |
Mining |
Liberia |
Phase 2 expansion project |
Increase production capacity to 15Mt/year |
Under review(d) |
a) In support of the Company's Action 2020 program that was
launched at its fourth quarter and full-year 2015 earnings
announcement, the footprint optimization project at ArcelorMittal
Indiana Harbor is now underway, which has resulted in structural
changes required to improve asset and cost optimization. The plan
involves idling redundant operations including the #1 aluminize
line, 84" hot strip mill (HSM), and #5 continuous galvanizing line
(CGL) and No.2 steel shop (idled in 2Q 2017) whilst making further
planned investments totalling ~$200 million including a new caster
at No.3 steelshop (completed in 4Q 2016), restoration of the 80"
hot strip mill, logistics and Indiana Harbor finishing are ongoing.
The full project scope is expected to be completed in 2018.
b) On July 7, 2015, ArcelorMittal Poland announced it was
restarting preparations for the relining of blast furnace No. 5 in
Krakow, which was commissioned in 3Q 2016. Total investments in the
primary operations in the Krakow plant will amount to more than €40
million, which also includes modernization of the basic oxygen
furnace No. 3. Additional projects in the downstream operations
will also be implemented. These include the extension of the hot
rolling mill capacity by 0.9 million tons per annum and increasing
the hot dip galvanizing capacity by 0.4 million tons per annum
commissioned in 2Q 2017. In total, the Group has invested more than
€120 million in its operations in Krakow, including both upstream
and downstream installations.
c) Although the Monlevade wire rod expansion project and Juiz de
Fora rebar expansion were completed in 2015, the Juiz de Fora
melt shop project is currently on hold and is expected to be
completed upon Brazil domestic market recovery, and the
Company does not expect to increase shipments until domestic demand
improves.
d) ArcelorMittal Liberia is moving ore extraction from its
depleting DSO (direct shipping ore) deposit at Tokadeh to the
nearby, low strip ratio and higher-grade DSO Gangra deposit where
planned ramp up will occur in 2H 2017. Following a period of
exploration cessation caused by the onset of Ebola, ArcelorMittal
Liberia recommenced drilling for DSO resource extensions in late
2015. During 2016, the operation at Tokadeh was right-sized to
focus on its "natural" Atlantic markets. The nearby Gangra deposit
is now the next development in a staged approach as opposed to the
originally planned phase 2 step up to 15Mtpa of concentrate sinter
fine ore product that was delayed in August 2014 due to the
declaration of force majeure by contractors following the Ebola
virus outbreak, and then reassessed following rapid iron ore price
declines over the period since. The Gangra mine, haul road and
related existing plant and equipment upgrades are on track.
ArcelorMittal remains committed to Liberia where it operates a full
value chain of mine, rail and port and where it has been
operating the mine on a DSO basis since 2011. The Company
believes that ArcelorMittal Liberia presents a strong, competitive
source of product ore for the international market based on
continuing DSO mining and then moving to a long-term sinter feed
concentration phase.
Analysis of segment operations NAFTA
(USDm) unless otherwise
shown |
2Q 17 |
1Q 17 |
2Q 16 |
1H 17 |
1H 16 |
Sales |
4,607 |
4,458 |
3,920 |
9,065 |
7,742 |
Operating
income |
378 |
396 |
1,209 |
774 |
1,414 |
Depreciation |
(128) |
(128) |
(136) |
(256) |
(270) |
Exceptional income5 |
- |
- |
832 |
- |
832 |
EBITDA |
506 |
524 |
513 |
1,030 |
852 |
Crude
steel production (kt) |
5,762 |
6,216 |
5,735 |
11,978 |
11,379 |
Steel
shipments (kt) |
5,419 |
5,610 |
5,443 |
11,029 |
10,906 |
Average
steel selling price (US$/t) |
760 |
719 |
660 |
739 |
647 |
NAFTA segment crude steel production decreased 7.3% to 5.8
million metric tonnes in 2Q 2017 as compared to 6.2 million metric
tonnes for 1Q 2017 primarily due to planned maintenance. Steel
shipments in 2Q 2017 decreased by 3.4% to 5.4 million metric tonnes
as compared to 5.6 million metric tonnes in 1Q 2017, primarily
driven by a 3.9% decrease in flat products volumes offset in part
by 1.9% increase in long products. Sales in 2Q 2017 increased
by 3.3% to $4.6 billion as compared to $4.5 billion in 1Q 2017,
primarily due to higher average steel selling prices (+5.7%) offset
in part by lower steel shipment volumes as discussed above.
Compared to 1Q 2017, average steel selling prices for flat products
improved by +5.8% and for long products improved by +4.3%.
Operating income in 2Q 2017 decreased to $378 million as
compared to operating income of $396 million in 1Q 2017 and
operating income of $1,209 million in 2Q 2016. Operating
performance for 2Q 2016 was positively impacted by a one-time gain
of $0.8 billion on employee benefits following the signing of the
US labour contract5. EBITDA in 2Q 2017 decreased by 3.3% to
$506 million as compared to $524 million in 1Q 2017 primarily due
to lower steel shipment volumes (-3.4%) and higher costs, including
planned maintenance ($45 million), partially offset by higher
average steel selling prices. EBITDA in 2Q 2017 declined by 1.2% as
compared to $513 million in 2Q 2016. Brazil
(USDm) unless otherwise
shown |
2Q 17 |
1Q 17 |
2Q 16 |
1H 17 |
1H 16 |
Sales |
1,834 |
1,610 |
1,488 |
3,444 |
2,743 |
Operating
income |
128 |
175 |
149 |
303 |
238 |
Depreciation |
(73) |
(71) |
(64) |
(144) |
(120) |
EBITDA |
201 |
246 |
213 |
447 |
358 |
Crude
steel production (kt) |
2,714 |
2,710 |
2,800 |
5,424 |
5,467 |
Steel
shipments (kt) |
2,622 |
2,226 |
2,689 |
4,848 |
5,161 |
Average
steel selling price (US$/t) |
655 |
678 |
515 |
666 |
495 |
Brazil segment crude steel production was stable at 2.7
million metric tonnes in 2Q 2017 as compared to 1Q 2017. Steel
shipments in 2Q 2017 increased by 17.8% to 2.6 million metric
tonnes as compared to 2.2 million metric tonnes in 1Q 2017,
primarily due to a 23.4% increase in flat product steel shipments
(primarily export shipments and temporary shipment delays in the
prior quarter) and a 9% increase in long product steel shipments.
Sales in 2Q 2017 increased by 13.9% to $1.8 billion as
compared to $1.6 billion in 1Q 2017, due to higher steel shipments
offset in part by lower average steel selling prices (-3.4%) driven
in part by foreign exchange. Operating income in 2Q 2017
decreased to $128 million as compared to an operating income of
$175 million in 1Q 2017 and operating income of $149 million in 2Q
2016. EBITDA in 2Q 2017 decreased by 18% to $201 million as
compared to $246 million in 1Q 2017 primarily due to a negative
price cost impact and weaker product mix offset in part by higher
steel shipment volumes. EBITDA in 1Q 2017 included a $21 million
provision reversal. EBITDA in 2Q 2017 was 5.4% lower as compared to
$213 million in 2Q 2016. Europe
(USDm) unless otherwise
shown |
2Q 17 |
1Q 17 |
2Q 16 |
1H 17 |
1H 16 |
Sales |
9,180 |
8,222 |
7,810 |
17,402 |
14,961 |
Operating
income |
652 |
636 |
383 |
1,288 |
469 |
Depreciation |
(290) |
(273) |
(293) |
(563) |
(570) |
Impairment |
- |
- |
(49) |
- |
(49) |
EBITDA |
942 |
909 |
725 |
1,851 |
1,088 |
Crude
steel production (kt) |
10,997 |
11,212 |
10,720 |
22,209 |
21,891 |
Steel
shipments (kt) |
10,466 |
10,208 |
10,886 |
20,674 |
21,330 |
Average
steel selling price (US$/t) |
698 |
649 |
562 |
674 |
546 |
Europe segment crude steel production decreased by 1.9% to
11.0 million metric tonnes in 2Q 2017, as compared to 11.2 million
metric tonnes in 1Q 2017. Steel shipments in 2Q 2017 increased
by 2.5% to 10.5 million metric tonnes as compared to 10.2 million
metric tonnes in 1Q 2017, primarily due to a 3.8% increase in long
product shipments and 1.4% increase in flat product steel
shipments. Sales in 2Q 2017 increased 11.7% to $9.2 billion as
compared to $8.2 billion in 1Q 2017, primarily due to higher steel
shipments as discussed above and higher average steel selling
prices (+7.7%), with flat and long products average steel selling
prices increasing +8.4% and +5.7%, respectively. Operating
income in 2Q 2017 was $652 million as compared to $636 million in
1Q 2017 and $383 million in 2Q 2016. Operating performance in 2Q
2016 was negatively impacted by $49 million of impairment related
to the sale of ArcelorMittal Zaragoza facility in
Spain. EBITDA in 2Q 2017 increased by 3.6% to $942 million as
compared to $909 million in 1Q 2017 primarily due to higher steel
volumes partially offset by negative price-cost impact. EBITDA in
2Q 2017 improved 29.8% as compared to 2Q 2016 primarily on account
of positive price cost impact offset in part by lower steel
shipments. ACIS
(USDm) unless otherwise
shown |
2Q 17 |
1Q 17 |
2Q 16 |
1H 17 |
1H 16 |
Sales |
1,834 |
1,807 |
1,581 |
3,641 |
2,773 |
Operating
income |
51 |
116 |
162 |
167 |
147 |
Depreciation |
(77) |
(75) |
(80) |
(152) |
(156) |
Impairment |
(46) |
- |
- |
(46) |
- |
EBITDA |
174 |
191 |
242 |
365 |
303 |
Crude
steel production (kt) |
3,685 |
3,492 |
3,926 |
7,177 |
7,594 |
Steel
shipments (kt) |
3,257 |
3,221 |
3,453 |
6,478 |
6,768 |
Average
steel selling price (US$/t) |
499 |
502 |
409 |
500 |
365 |
ACIS segment crude steel production in 2Q 2017 increased
by 5.5% to 3.7 million metric tonnes as compared to 3.5 million
metric tonnes in 1Q 2017. The higher production was largely due to
increased output in Ukraine following the planned maintenance of
BF#9 in 1Q 2017. Steel shipments in 2Q 2017 increased by 1.1%
to 3.3 million metric tonnes as compared to 3.2 million metric
tonnes in 1Q 2017 primarily due to higher steel shipments in
Ukraine as the prior period had been impacted by the planned
maintenance as described above, offset in part by lower South
Africa shipments due to weak demand. Sales in 2Q 2017
increased 1.5% to $1.8 billion as compared to 1Q 2017, primarily
due to higher steel shipments (+1.1%) offset in part by lower
average steel selling prices (-0.6%). Operating income in 2Q
2017 was $51 million as compared to an operating income of $116
million in 1Q 2017 and operating income of $162 million in 2Q 2016.
Operating performance in 2Q 2017 was impacted by impairment charges
of $46 million related to a downward revision of cash flow
projections in South Africa. EBITDA in 2Q 2017 decreased
9.1% to $174 million as compared to $191 million in 1Q 2017, due to
weaker performance in South Africa (impacted by lower volumes and a
negative price cost impact). EBITDA in 2Q 2017 was 28.2% lower as
compared to $242 million in 2Q 2016, primarily due to a negative
price cost impact and lower steel shipment volumes in South
Africa. Mining
(USDm) unless otherwise
shown |
2Q 17 |
1Q 17 |
2Q 16 |
1H 17 |
1H 16 |
Sales |
1,015 |
1,030 |
809 |
2,045 |
1,409 |
Operating
income |
216 |
378 |
62 |
594 |
60 |
Depreciation |
(103) |
(102) |
(101) |
(205) |
(201) |
EBITDA |
319 |
480 |
163 |
799 |
261 |
Own iron
ore production (a) (Mt) |
14.7 |
14.0 |
13.5 |
28.7 |
27.6 |
Iron ore
shipped externally and internally at market price (b) (Mt) |
9.5 |
8.7 |
9.6 |
18.1 |
17.4 |
Iron ore
shipment - cost plus basis (Mt) |
5.8 |
4.7 |
5.8 |
10.5 |
11.1 |
Own coal
production(a) (Mt) |
1.6 |
1.7 |
1.4 |
3.3 |
2.9 |
Coal
shipped externally and internally at market price(b) (Mt) |
0.8 |
0.8 |
0.7 |
1.6 |
1.6 |
Coal
shipment - cost plus basis (Mt) |
0.9 |
0.9 |
0.8 |
1.8 |
1.7 |
(a) Own iron ore and coal production not including
strategic long-term contracts.(b) Iron ore and coal shipments of
market-priced based materials include the Company's own mines, and
share of production at other mines, and exclude supplies under
strategic long-term contracts. Own iron ore production in 2Q
2017 increased by 4.9% to 14.7 million metric tonnes as compared to
14 million metric tonnes in 1Q 2017 due to seasonally higher
production in Canada and increased production in Mexico (Volcan
mine restarted February 2017). Own iron ore production in 2Q 2017
increased by 9.1% as compared to 2Q 2016 primarily due to increased
production in Canada and Mexico. Market-priced iron ore
shipments in 2Q 2017 increased 9.5% to 9.5 million metric tonnes as
compared to 8.7 million metric tonnes in 1Q 2017, primarily driven
by higher shipments in ArcelorMittal Mines Canada[8] and Mexico.
Market-priced iron ore shipments in 2Q 2017 decreased 1.2% as
compared to 2Q 2016 driven by decreased shipments in Canada,
Liberia and Brazil offset by higher shipments in Mexico. FY 2017
market-priced iron ore shipments are still expected to increase by
approximately 10% versus FY 2016. Own coal production in 2Q
2017 decreased by 5.8% to 1.6 million metric tonnes as compared to
1.7 million metric tonnes at 1Q 2017 due to lower production in
Kazakhstan. Own coal production in 2Q 2017 increased 11.5% as
compared to 2Q 2016 with increases at both Kazakhstan and Princeton
(US) mines. Market-priced coal shipments in 2Q 2017 increased
3% to 0.8 million metric tonnes as compared to 1Q 2017 primarily
due to increased shipments at Princeton (US). Market-priced coal
shipments in 2Q 2017 increased 17.2% as compared to 2Q 2016
primarily due to increased shipments at Princeton (US) and
Kazakhstan. Operating income in 2Q 2017 decreased to $216
million as compared to an operating income of $378 million in 1Q
2017, and an operating income of $62 million in 2Q 2016, primarily
for the reasons discussed below. EBITDA in 2Q 2017 decreased
33.7% to $319 million as compared to $480 million in 1Q 2017,
primarily due to decreased seaborne iron ore reference prices
(-26.6%) and lower coal prices, partially offset by higher
market-priced iron ore shipments. EBITDA in 2Q 2017 was
significantly higher as compared to $163 million in 2Q 2016,
primarily due to higher seaborne iron ore reference prices (+13%)
and higher coal prices offset in part by lower market-priced iron
ore shipment volumes (-1.2%). Liquidity and Capital
Resources For 2Q 2017, net cash provided by operating
activities was $1,214 million as compared to net cash used in
operating activities of $299 million in 1Q 2017 and net cash
provided by operating activities of $869 million in 2Q 2016. The
net cash provided by operating activities during 2Q 2017 reflects
in part a working capital investment ($548 million) as a result of
higher inventory, smaller as compared to a working capital
investment ($2,181 million) in 1Q 2017. Net cash used in
investing activities during 2Q 2017 was $738 million as compared to
net cash used in investing activities of $598 million in 1Q 2017
and net cash provided by investing activities of $538 million in 2Q
2016. Capital expenditure decreased to $566 million in 2Q 2017 as
compared to $580 million in 1Q 2017 and $521 million in 2Q 2016. FY
2017 capital expenditure is expected to be $2.9 billion. Investing
activities in 2Q 2017 include $44 million cash consideration (net
of cash acquired for $14 million) for the acquisition of a 55.5%
stake in Bekaert Sumare (a tire cord manufacturer in Brazil) and
$110 million deposited in a restricted cash account in
ArcelorMittal South Africa in connection with various environmental
obligations and true sale of receivable programs. Net
cash used in financing activities for 2Q 2017 was $744 million as
compared to net cash provided by financing activities of $666
million for 1Q 2017 and net cash used in financing activities of
$1.9 billion for 2Q 2016. Net cash used in financing activities for
2Q 2017 primarily includes $851 million used to early redeem the
9.85% Notes due June 1, 2019. On May 25, 2017, ArcelorMittal South
Africa Limited, signed a 4.5 billion South African Rand
(approximately $350 million) revolving borrowing base finance
facility maturing on May 25, 2020. As of June 30, 2017, $258
million was drawn. Net cash provided by financing activities for 1Q
2017 primarily includes proceeds from the European Investment Bank
loan[9] of €350 million ($373 million) and $0.3 billion of
commercial paper issuances. Net cash used in financing activities
for 2Q 2016 primarily includes payments totalling $4.9 billion
relating to bond repurchases pursuant to cash tender offers ($2.1
billion); early redemption of the 4.5% Notes due February 25, 2017
($1.4 billion) and €1.0 billion in bond repayments at maturity,
partially offset by proceeds from a $3.1 billion rights
issue. During 1Q 2017, the Company paid dividends of $40
million primarily to minority shareholders in ArcelorMittal Mines
Canada8. During 2Q 2016 the Company paid dividends primarily to
minority shareholders in ArcelorMittal Mines Canada8 and Brazil
(Bekaert) of $41 million. As of June 30, 2017, the Company's
cash and cash equivalents amounted to $2.3 billion as compared to
$2.4 billion at March 31, 2017 and $2.4 billion at June 30, 2016.
Gross debt decreased to $14.2 billion as of June 30, 2017, as
compared to $14.5 billion at March 31, 2017 and $15.1 billion at
June 30, 2016. As of June 30, 2017, net debt decreased to
$11.9 billion as compared with $12.1 billion at March 31, 2017
primarily due to positive free cashflow, despite working capital
investment, offset in part by forex ($0.4 billion), and was lower
than the net debt of $12.7 billion as of June 30, 2016. As of
June 30, 2017, the Company had liquidity of $7.8 billion,
consisting of cash and cash equivalents of $2.3 billion and $5.5
billion of available credit lines[10]. The $5.5 billion credit
facility contains a financial covenant of 4.25x Net debt / EBITDA.
On June 30, 2017, the average debt maturity was 6.4 years.
Key recent developments
- On June 21, 2017, as a result of the extension of the
partnership between ArcelorMittal and Bekaert Group ("Bekaert") in
the steel cord business in Brazil, the Company completed the
acquisition from Bekaert of a 55.5% controlling interest in Bekaert
Sumaré Ltda subsequently renamed ArcelorMittal Bekaert Sumaré Ltda
("Sumaré"), a manufacturer of metal ropes for automotive tires
located in the municipality of Sumaré/SP, Brazil. The Company
agreed to pay a total cash consideration of €56 million ($49
million net of cash acquired of $14 million), of which €52 million
($58 million) was settled on closing date and €4 million ($5
million) to be paid subsequently upon conclusion of certain
business restructuring measures by Bekaert.
- On June 16, 2017, ArcelorMittal and Marcegaglia announced that
AM Investco Italy Srl ('AM Investco') had concluded the exclusive
negotiation phase and reached a binding agreement concerning the
lease and obligation to purchase Ilva S.p.A and certain of its
subsidiaries with the Italian Government. The ancillary
documentation was completed on June 28, 2017. The closing of the
transaction is subject to certain conditions precedent, including
receipt of anti-trust approvals. Intesa Sanpaolo will formally join
the consortium before transaction closing.
Transaction highlights and key details of AM Investco's plans
for Ilva include:
- Purchase price of €1.8 billion, with annual leasing costs of
€180 million to be paid in quarterly installments. Ilva's assets
will be initially leased by AM Investco, with rental payments
qualifying as down payments against the purchase price. Lease
period to be a minimum of two years.
- Robust investment plan to materially improve Ilva's
environmental footprint and realise its full potential, including
investments of approximately €2.4 billion (approximately €2.1
billion net of funds seized from the former shareholder) over a
seven-year period;
- €10 million start-up investment in new research and development
(R&D) centre in Taranto, which will initially focus on ensuring
a successful deployment of the industrial, environment and
commercial plans, while also ensuring a smooth transfer of
ArcelorMittal R&D intellectual property and knowledge to
enhance operationally efficiency, quality and productivity at all
Ilva plants;
- The assets will be transferred to AM Investco free of long term
liabilities and financial debt and will include €1 billion of net
working capital, subject to adjustment;
- Identified synergies of €310 million targeted by 2020 (excludes
impact from fixed cost reductions and volume improvements).
- On June 2, 2017, ArcelorMittal officially launched the second
generation of its iCARe® electrical steels at this year's
coil-winding expo CWIEME in Berlin, between June 20-22, 2017.
iCARe® steel grades play a central role in the construction of
electric motors which are used in both electric vehicles and
conventional cars.
- On May 25, 2017, ArcelorMittal South Africa Limited, signed a
4.5 billion South African Rand (approximately $350 million)
revolving borrowing base finance facility maturing on May 25, 2020.
Any borrowings under the facility will be secured by certain
eligible inventory and receivables, as well as certain other
working capital and related assets of ArcelorMittal South Africa.
The facility will be used for general corporate purposes. The
facility is not guaranteed by ArcelorMittal. As of June 30,
2017, $258 million was drawn.
- On May 22, 2017, following the approval of the Reverse Stock
Split (as defined below) by the extraordinary general meeting of
shareholders of ArcelorMittal held on May 10, 2017, ArcelorMittal
has completed the consolidation of each three existing shares in
ArcelorMittal without nominal value into one share without nominal
value (the "Reverse Stock Split"). As a result, the share capital
of ArcelorMittal is now represented by 1,021,903,623 ordinary
shares without nominal value while the authorised share capital of
ArcelorMittal is represented by 1,151,576,921 ordinary shares
without nominal value.
- On May 10, 2017, Poland's deputy prime minister Mateusz
Morawiecki took part in an official ceremony to mark the completion
of a series of important investment projects at ArcelorMittal
Poland's Kraków unit. Investments exceeding €120 million which were
commissioned in 2016, and achieved their operational ramp-up very
recently, included the relining of blast furnace no 5,
modernization of the basic oxygen furnace, capacity expansion of
the hot rolling mill and a new galvanizing line.
Outlook and guidance The following global apparent
steel consumption ("ASC") figures have been updated to reflect the
Company's latest outlook for 2017. Based on the current
economic outlook, ArcelorMittal has raised its 2017 global steel
demand forecasts. 2017 global ASC is now expected to grow by
approximately +2.5% to +3.0% (revised up from previous forecast
+0.5% to +1.5%). By region: ASC in the US (excluding Pipe &
tube) is now expected to grow +2.0% to +3.0% (revised down from
previous forecast of +3.0% to 4.0%) reflecting lower automotive
production impacting flat products. In Europe, ArcelorMittal
expects the pick-up in underlying demand to continue, driven
primarily by strength of the construction and machinery markets,
and apparent demand is expected to remain at +0.5% to +1.5% in 2017
on top of around 3% growth in 2016. In Brazil, 2017 ASC is
expected to grow by +2.0% to +3.0% in 2017 (revised down from
previous forecast +3.0% to +4.0%) as the continued weakness in
construction is partially offset by mild improvement in consumer
confidence and automotive demand. In the CIS, ASC is expected
to grow +2.0 to +2.5% (revised up from previous forecast of -0.5%
to +0.5%) reflecting stronger economic growth in Russia. In China,
ASC growth of +2.5% to +3.5% in 2017 (revised up from previous
forecast of -1.0% to 0%), primarily due to strength in real estate
and machinery. Current market conditions are improved
compared to twelve months ago with steel spreads currently at
healthy levels. The demand environment is positive, as evidenced by
the highest readings from the ArcelorMittal weighted PMI Index
since April 2011, which suggests that steel shipments in 2H 2017
will be higher than would normally be suggested by seasonality
alone. The Company now expects that the cash needs of the
business (excluding working capital and premiums paid to retire
debt early of $0.2 billion (not included in previous guidance)) in
2017 to be approximately $4.6 billion (as compared to $5.0 billion
previous guidance). Given the liability management exercise and
lower average debt we now expect interest expense in 2017 to
decline to $0.8 billion in 2017 (as compared to $0.9 billion from
previous guidance and $1.1 billion in FY 2016). While capex
expectation for 2017 remains at $2.9 billion (from $2.4 billion in
2016), the Company expects lower cash taxes and contributions to
fund pensions and other cash expenses to be lower than previous
guidance. Given the improved market conditions, the Company
now expects a full year 2017 investment in working capital of
approximately $1.5 billion (as compared to previous guidance of
approximately $1 billion). ArcelorMittal Condensed
Consolidated Statement of Financial Position1
|
|
|
Jun 30, |
Mar 31, |
Dec 31, |
In
millions of U.S. dollars |
|
|
2017 |
2017 |
2016 |
ASSETS |
|
|
|
|
|
Cash and
cash equivalents |
|
|
2,272 |
2,402 |
2,615 |
Trade
accounts receivable and other |
|
|
4,263 |
3,971 |
2,974 |
Inventories |
|
|
17,458 |
16,393 |
14,734 |
Prepaid
expenses and other current assets |
|
|
2,286 |
2,251 |
1,665 |
Assets
held for sale[11] |
|
|
127 |
126 |
259 |
Total
Current Assets |
|
|
26,406 |
25,143 |
22,247 |
|
|
|
|
|
|
Goodwill
and intangible assets |
|
|
5,769 |
5,716 |
5,651 |
Property,
plant and equipment |
|
|
35,765 |
35,049 |
34,831 |
Investments in associates and joint ventures |
|
|
4,679 |
4,470 |
4,297 |
Deferred
tax assets |
|
|
6,470 |
5,931 |
5,837 |
Other
assets |
|
|
2,371 |
2,182 |
2,279 |
Total
Assets |
|
|
81,460 |
78,491 |
75,142 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Short-term debt and current portion of long-term debt |
|
|
3,936 |
3,452 |
1,885 |
Trade
accounts payable and other |
|
|
12,555 |
12,043 |
11,633 |
Accrued
expenses and other current liabilities |
|
|
4,930 |
4,853 |
4,502 |
Liabilities held for sale11 |
|
|
39 |
38 |
95 |
Total
Current Liabilities |
|
|
21,460 |
20,386 |
18,115 |
|
|
|
|
|
|
Long-term
debt, net of current portion |
|
|
10,220 |
11,047 |
11,789 |
Deferred
tax liabilities |
|
|
2,690 |
2,626 |
2,529 |
Other
long-term liabilities |
|
|
10,838 |
10,503 |
10,384 |
Total
Liabilities |
|
|
45,208 |
44,562 |
42,817 |
|
|
|
|
|
|
Equity
attributable to the equity holders of the parent |
|
|
34,027 |
31,743 |
30,135 |
Non-controlling interests |
|
|
2,225 |
2,186 |
2,190 |
Total
Equity |
|
|
36,252 |
33,929 |
32,325 |
Total
Liabilities and Shareholders' Equity |
|
|
81,460 |
78,491 |
75,142 |
ArcelorMittal Condensed Consolidated Statement of
Operations1
|
Three months ended |
Six months ended |
In
millions of U.S. dollars unless otherwise shown |
Jun 30,
2017 |
Mar 31,
2017 |
Jun 30,
2016 |
Jun 30,
2017 |
Jun 30,
2016 |
Sales |
17,244 |
16,086 |
14,743 |
33,330 |
28,142 |
Depreciation |
(676) |
(655) |
(680) |
(1,331) |
(1,332) |
Impairment |
(46) |
- |
(49) |
(46) |
(49) |
Exceptional income5 |
- |
- |
832 |
- |
832 |
Operating income |
1,390 |
1,576 |
1,873 |
2,966 |
2,148 |
Operating
margin % |
8.1% |
9.8% |
12.7% |
8.9% |
7.6% |
|
|
|
|
|
|
Income
from associates, joint ventures and other investments |
120 |
86 |
168 |
206 |
492 |
Net
interest expense |
(207) |
(223) |
(306) |
(430) |
(638) |
Foreign
exchange and other net financing gain/(loss) |
210 |
(133) |
(450) |
77 |
(441) |
Income
before taxes and non-controlling interests |
1,513 |
1,306 |
1,285 |
2,819 |
1,561 |
Current tax |
(126) |
(207) |
(83) |
(333) |
(107) |
Deferred tax |
(71) |
(76) |
(70) |
(147) |
(746) |
Income
tax expense |
(197) |
(283) |
(153) |
(480) |
(853) |
Income
including non-controlling interests |
1,316 |
1,023 |
1,132 |
2,339 |
708 |
Non-controlling interests (income) / loss |
6 |
(21) |
(20) |
(15) |
(12) |
Net
income attributable to equity holders of the parent |
1,322 |
1,002 |
1,112 |
2,324 |
696 |
|
|
|
|
|
|
Basic
earnings per common share ($)4 |
1.30 |
0.98 |
1.13 |
2.28 |
0.88 |
Diluted
earnings per common share ($)4 |
1.29 |
0.98 |
1.13 |
2.27 |
0.88 |
|
|
|
|
|
|
Weighted average common shares outstanding (in millions)4 |
1,020 |
1,020 |
987 |
1,020 |
792 |
Diluted
weighted average common shares outstanding (in millions)4 |
1,023 |
1,022 |
988 |
1,023 |
793 |
|
|
|
|
|
|
OTHER
INFORMATION |
|
|
|
|
|
EBITDA |
2,112 |
2,231 |
1,770 |
4,343 |
2,697 |
EBITDA
Margin % |
12.2% |
13.9% |
12.0% |
13.0% |
9.6% |
|
|
|
|
|
|
Own iron
ore production (million metric tonnes) |
14.7 |
14.0 |
13.5 |
28.7 |
27.6 |
Crude
steel production (million metric tonnes) |
23.2 |
23.6 |
23.1 |
46.8 |
46.3 |
Total
shipments of steel products (million metric tonnes) |
21.5 |
21.1 |
22.1 |
42.5 |
43.6 |
ArcelorMittal Condensed Consolidated Statement of Cash
flows1
|
Three months ended |
Six months ended |
In
millions of U.S. dollars |
Jun 30,
2017 |
Mar 31,
2017 |
Jun 30,
2016 |
Jun 30,
2017 |
Jun 30,
2016 |
Operating activities: |
|
|
|
|
|
Income
attributable to equity holders of the parent |
1,322 |
1,002 |
1,112 |
2,324 |
696 |
Adjustments to reconcile net income to net cash (used in) /
provided by operations: |
|
|
|
|
|
Non-controlling interest's income / (loss) |
(6) |
21 |
20 |
15 |
12 |
Depreciation and impairment |
722 |
655 |
729 |
1,377 |
1,381 |
Exceptional income5 |
- |
- |
(832) |
- |
(832) |
Income
from associates, joint ventures and other investments |
(120) |
(86) |
(168) |
(206) |
(492) |
Deferred
income tax |
71 |
76 |
70 |
147 |
746 |
Change in
working capital |
(548) |
(2,181) |
235 |
(2,729) |
(953) |
Other
operating activities (net) |
(227) |
214 |
(297) |
(13) |
(379) |
Net
cash provided by / (used in) operating activities |
1,214 |
(299) |
869 |
915 |
179 |
Investing activities: |
|
|
|
|
|
Purchase
of property, plant and equipment and intangibles |
(566) |
(580) |
(521) |
(1,146) |
(1,107) |
Other
investing activities (net) |
(172) |
(18) |
1,059 |
(190) |
1,073 |
Net
cash (used in) / provided by investing activities |
(738) |
(598) |
538 |
(1,336) |
(34) |
Financing activities: |
|
|
|
|
|
Net
(payments) / proceeds relating to payable to banks and long-term
debt |
(726) |
743 |
(4,923) |
17 |
(4,840) |
Dividends
paid |
- |
(40) |
(41) |
(40) |
(47) |
Equity
offering |
- |
- |
3,115 |
- |
3,115 |
Other
financing activities (net) |
(18) |
(37) |
(8) |
(55) |
55 |
Net
cash (used in) / provided by financing activities |
(744) |
666 |
(1,857) |
(78) |
(1,717) |
Net
decrease in cash and cash equivalents |
(268) |
(231) |
(450) |
(499) |
(1,572) |
Cash and
cash equivalents transferred from assets held for sale |
- |
13 |
- |
13 |
- |
Effect of
exchange rate changes on cash |
30 |
3 |
(23) |
33 |
(141) |
Change
in cash and cash equivalents |
(238) |
(215) |
(473) |
(453) |
(1,713) |
Appendix 1: Product shipments by region
(000'kt) |
2Q 17 |
1Q 17 |
2Q 16 |
1H 17 |
1H 16 |
Flat |
4,748 |
4,944 |
4,641 |
9,692 |
9,208 |
Long |
845 |
829 |
964 |
1,674 |
2,001 |
NAFTA |
5,419 |
5,610 |
5,443 |
11,029 |
10,906 |
Flat |
1,682 |
1,364 |
1,627 |
3,046 |
3,082 |
Long |
945 |
866 |
1,065 |
1,811 |
2,074 |
Brazil |
2,622 |
2,226 |
2,689 |
4,848 |
5,161 |
Flat |
7,482 |
7,377 |
7,536 |
14,859 |
14,868 |
Long |
2,913 |
2,806 |
3,316 |
5,719 |
6,380 |
Europe |
10,466 |
10,208 |
10,886 |
20,674 |
21,330 |
CIS |
2,212 |
2,119 |
2,322 |
4,331 |
4,524 |
Africa |
1,045 |
1,102 |
1,130 |
2,147 |
2,242 |
ACIS |
3,257 |
3,221 |
3,453 |
6,478 |
6,768 |
Note: "Others and eliminations" lines are not presented in the
table Appendix 2: Capital expenditures
(USDm) |
2Q 17 |
1Q 17 |
2Q 16 |
1H 17 |
1H 16 |
NAFTA |
90 |
97 |
103 |
187 |
209 |
Brazil |
55 |
57 |
48 |
112 |
112 |
Europe |
248 |
252 |
192 |
500 |
467 |
ACIS |
75 |
73 |
101 |
148 |
164 |
Mining |
94 |
90 |
71 |
184 |
142 |
Total |
566 |
580 |
521 |
1,146 |
1,107 |
Note: "Segment others" are not presented in the
table Appendix 3: Debt repayment schedule as of June 30,
2017
Debt repayment schedule (USD billion) |
2017 |
2018 |
2019 |
2020 |
2021 |
>2021 |
Total |
Bonds |
0.6 |
1.5 |
0.9 |
1.9 |
1.3 |
4.8 |
11.0 |
Commercial paper |
0.5 |
0.2 |
- |
- |
- |
- |
0.7 |
Other
loans* |
1.0 |
0.2 |
0.3 |
0.2 |
0.2 |
0.6 |
2.5 |
Total
gross debt |
2.1 |
1.9 |
1.2 |
2.1 |
1.5 |
5.4 |
14.2 |
* Other loans in 2017 include a $0.5 billion drawing under the
ArcelorMittal USA $1 billion asset based loan (facility available
until 2021) and a $258 million drawing under a ZAR 4.5 billion
(approximately $350 million) revolving borrowing base finance
facility in South Africa (facility available until 2020)
Appendix 4: Credit lines available as of June 30,
2017
Credit lines available (USD billion) |
|
|
Maturity |
Commitment |
Drawn |
Available |
- $2.3bn
tranche of $5.5bn revolving credit facility |
|
|
21/12/2019 |
2.3 |
- |
2.3 |
- $3.2bn
tranche of $5.5bn revolving credit facility |
|
|
21/12/2021 |
3.2 |
- |
3.2 |
Total
committed lines |
|
|
|
5.5 |
- |
5.5 |
Appendix 5: Reconciliation of EBITDA to operating income
(USDm) |
2Q
17 |
1Q
17 |
2Q
16 |
1H
17 |
1H
16 |
EBITDA |
2,112 |
2,231 |
1,770 |
4,343 |
2,697 |
Depreciation |
(676) |
(655) |
(680) |
(1,331) |
(1,332) |
Impairment |
(46) |
- |
(49) |
(46) |
(49) |
Exceptional income5 |
- |
- |
832 |
- |
832 |
Operating income |
1,390 |
1,576 |
1,873 |
2,966 |
2,148 |
Note: Segment EBITDA is reconciled to segment operating income
in each of the segment discussions above. Appendix 6:
Reconciliation of net debt
(USDm) |
Jun 30,
2017 |
Mar 31,
2017 |
Dec 31,
2016 |
Short-term debt and current portion of long-term debt |
3,936 |
3,452 |
1,885 |
Long-term
debt, net of current portion |
10,220 |
11,047 |
11,789 |
Gross
Debt |
14,156 |
14,499 |
13,674 |
Less: |
|
|
|
Cash and
cash equivalents |
(2,272) |
(2,402) |
(2,615) |
Net
debt |
11,884 |
12,097 |
11,059 |
Appendix 7: Reconciliation of free cashflow
(USDm) |
2Q
17 |
1Q
17 |
2Q
16 |
1H 17 |
1H 16 |
Net cash (used in) / provided by operating activities |
1,214 |
(299) |
869 |
915 |
179 |
Less: |
|
|
|
|
|
Purchase
of property, plant and equipment and intangibles |
(566) |
(580) |
(521) |
(1,146) |
(1,107) |
Free
cashflow - positive/(negative) |
648 |
(879) |
348 |
(231) |
(928) |
Appendix 8: Terms and definitions Unless indicated
otherwise, or the context otherwise requires, references in this
earnings release report to the following terms have the meanings
set out next to them below: Average steel selling prices:
calculated as steel sales divided by steel shipments.Cash and cash
equivalents: represents cash and cash equivalents, restricted cash
and short-term investments.Capex: includes the acquisition of
tangible and intangible assets. EBITDA: operating income plus
depreciation, impairment expenses and exceptional
income/(charges).EBITDA/tonne: calculated as EBITDA divided by
total steel shipments.Exceptional income / (charges): relate to
transactions that are significant, infrequent or unusual and are
not representative of the normal course of business such as
restructuring costs or asset disposals.Foreign exchange and other
net financing (loss) / gain: include foreign currency exchange
impact, bank fees, interest on pensions, impairments of financial
instruments, revaluation of derivative instruments and other
charges that cannot be directly linked to operating results. Free
cash flow: Refers to net cash provided by (used in) operating
activities less capex. Gross debt: long-term debt, plus short term
debt (including those held as part of liabilities held for
sale).Iron ore unit cash cost: includes weighted average pellet and
concentrate cost of goods sold across all mines.Liquidity: Cash and
cash equivalents plus available credit lines excluding back-up
lines for the commercial paper program.LTIF: lost time injury
frequency rate equals lost time injuries per 1,000,000 worked
hours, based on own personnel and contractors.Mining segment sales:
i) "External sales": mined product sold to third parties at market
price; ii) "Market-priced tonnes": internal sales of mined product
to ArcelorMittal facilities and reported at prevailing market
prices; iii) "Cost-plus tonnes" - internal sales of mined product
to ArcelorMittal facilities on a cost-plus basis. The determinant
of whether internal sales are reported at market price or cost-plus
is whether the raw material could practically be sold to third
parties (i.e. there is a potential market for the product and
logistics exist to access that market). Market-priced tonnes:
represent amounts of iron ore and coal from ArcelorMittal mines
that could be sold to third parties on the open market.
Market-priced tonnes that are not sold to third parties are
transferred from the Mining segment to the Company's steel
producing segments and reported at the prevailing market price.
Shipments of raw materials that do not constitute market-priced
tonnes are transferred internally and reported on a cost-plus
basis.Net debt: long-term debt, plus short term debt less cash and
cash equivalents.Net debt/EBITDA: Refers to Net debt divided by
last twelve months EBITDA calculation.On-going projects: Refer to
projects for which construction has begun (excluding various
projects that are under development), even if such projects have
been placed on hold pending improved operating conditions.Operating
segments: The NAFTA segment includes the Flat, Long and Tubular
operations of USA, Canada and Mexico. The Brazil segment includes
the Flat operations of Brazil, and the Long and Tubular operations
of Brazil and its neighboring countries including Argentina, Costa
Rica and Venezuela. The Europe segment comprises the Flat, Long and
Tubular operations of the European business, as well as Downstream
Solutions. The ACIS segment includes the Flat, Long and Tubular
operations of Kazakhstan, Ukraine and South Africa. Operating
results: Refers to operating income/(loss).Own iron ore production:
Includes total of all finished production of fines, concentrate,
pellets and lumps (excludes share of production and strategic
long-term contracts).Seaborne iron ore reference prices: refers to
iron ore prices for 62% Fe CFR China.Shipments information at
segment and group level eliminates intra-segment shipments (which
are primarily between Flat/Long plants and Tubular plants) and
inter-segment shipments respectively. Shipments of Downstream
Solutions are excluded.Steel-only EBITDA: calculated as EBITDA less
Mining segment EBITDA. Steel-only EBITDA/tonne: calculated as
steel-only EBITDA divided by total steel shipments.Working capital:
trade accounts receivable plus inventories less trade and other
accounts payable.YoY: Refers to year-on-year.
[1] The financial information in this press release has been
prepared consistently with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB") and as adopted by the European Union. The
interim financial information included in this announcement has
been also prepared in accordance with IFRS applicable to interim
periods, however this announcement does not contain sufficient
information to constitute an interim financial report as defined in
International Accounting Standard 34, "Interim Financial
Reporting". The numbers in this press release have not been
audited. The financial information and certain other information
presented in a number of tables in this press release have been
rounded to the nearest whole number or the nearest decimal.
Therefore, the sum of the numbers in a column may not conform
exactly to the total figure given for that column. In addition,
certain percentages presented in the tables in this press release
reflect calculations based upon the underlying information prior to
rounding and, accordingly, may not conform exactly to the
percentages that would be derived if the relevant calculations were
based upon the rounded numbers. This press release also includes
certain non-GAAP financial measures. ArcelorMittal presents EBITDA,
and EBITDA/tonne, which are non-GAAP financial measures and defined
in appendix 7, as additional measurements to enhance the
understanding of operating performance. ArcelorMittal believes such
indicators are relevant to describe trends relating to cash
generating activity and provides management and investors with
additional information for comparison of the Company's operating
results to the operating results of other companies. ArcelorMittal
also presents net debt and the ratio of net debt to EBITDA as an
additional measurement to enhance the understanding of its
financial position, changes to its capital structure and its credit
assessment. ArcelorMittal also presents free cash flow, which is a
non-GAAP financial measure defined in appendix 7, because it
believes it is a useful supplemental measure for evaluating the
strength of its cash generating capacity. Non-GAAP financial
measures should be read in conjunction with and not as an
alternative for, ArcelorMittal's financial information prepared in
accordance with IFRS. Such non-GAAP measures may not be comparable
to similarly titled measures applied by other companies. [2] Free
cashflow reconciliation provided in appendix 7. [3] On February 23,
2017, ArcelorMittal Brasil S.A. and Votorantim S.A. announced the
signing of a definitive agreement, pursuant to which Votorantim's
long steel businesses in Brazil, Votorantim Siderurgia, will become
a subsidiary of ArcelorMittal Brasil and Votorantim will hold a
minority stake in ArcelorMittal Brasil. Votorantim's long steel
operations in Argentina (Acerbrag) and Colombia (PazdelRÃo) were
not included in the transaction. The combination of the businesses
will result in a long product steel producer with annual crude
steel capacity of 5.6 million metric tonnes and annual rolling
capacity of 5.4 million metric tonnes. The transaction is subject
to regulatory approvals in Brazil, including the approval of the
Brazilian anti-trust authority CADE. Until closing,
ArcelorMittal Brasil and Votorantim Siderurgia will remain fully
separate and independent companies. [4] At the Extraordinary
General Meeting held on May 10, 2017, the ArcelorMittal
Shareholders approved a share consolidation based on a ratio 1:3,
whereby every three current shares are consolidated into one share
(with a change in the number of shares outstanding and the
accounting par value per share). The figures presented for the
basic and diluted earnings per share reflect this change and are
considering the share consolidation. [5] On June 23, 2016,
following the ratification by the United Steelworkers of a new
labor agreement which is valid until September 1, 2018,
ArcelorMittal made changes mainly to healthcare post-retirement
benefits in its subsidiary ArcelorMittal USA (NAFTA). The changes
resulted in a gain of $832 million recorded in 2Q 2016. [6] China
Oriental completed a share placement to restore the minimum 25%
free float as per HKEx listing requirements. Following the share
placement, ArcelorMittal's interest in China Oriental decreased
from 47% to 39%, as a result of which ArcelorMittal recorded a net
dilution loss of $44 million. [7] On February 5, 2016 ArcelorMittal
announced it had sold its 35% stake in Gestamp Automoción
("Gestamp") to the majority shareholder, the Riberas family, for a
total cash consideration of €875 million ($971 million). In
addition to the cash consideration, ArcelorMittal received in 2Q
2016 a payment of $11 million as a 2015 dividend. ArcelorMittal
will continue its supply relationship with Gestamp through its 35%
shareholding in Gonvarri, a sister company of Gestamp.
ArcelorMittal sells coils to Gonvarri for processing before they
pass to Gestamp and other customers. Further, ArcelorMittal will
continue to have a board presence in Gestamp, collaborate in
automotive R&D and remain its major steel supplier. [8]
ArcelorMittal Mines Canada, otherwise known as ArcelorMittal Mines
and Infrastructure Canada [9] On December 16, 2016, ArcelorMittal
signed a €350 million finance contract with the European Investment
Bank in order to finance European research, development and
innovation projects over the 2017-2020 period within the European
Union, predominantly France, Belgium and Spain, but also in the
Czech Republic, Poland, Luxembourg and Romania. The Company
benefits from a guarantee from the European Union under the
European Fund for Strategic Investments. [10] On December 21, 2016,
ArcelorMittal signed an agreement for a $5.5 billion revolving
credit facility (the "Facility"). This Facility amends and restates
the $6 billion revolving credit facility dated April 30, 2015. The
amended agreement incorporates a first tranche of $2.3 billion
maturing on December 21, 2019, and a second tranche of $3.2 billion
maturing on December 21, 2021. The Facility may be used for general
corporate purposes. As of June 30, 2017, the $5.5 billion revolving
credit facility remains fully available. [11] Assets and
liabilities held for sale, as of June 30, 2017, and as of March 31,
2017, primarily include the carrying value of the USA long product
facilities at Steelton ("Steelton"). Assets and liabilities held
for sale as of December 31, 2016, include the carrying value of
Steelton and some activities of ArcelorMittal Downstream Solutions
in the Europe segment and America's Tailored Blanks
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/e6ca6672-60d1-4bcf-a873-6ca8bbcd2129
Arcelor Mittal (NYSE:MT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Arcelor Mittal (NYSE:MT)
Historical Stock Chart
From Sep 2023 to Sep 2024